The 15th PwC Global Power & Utilities Survey

The narrowing window for energy transformation

For the past 15 years, PwC experts have annually analysed the global energy market and current energy trends, reviewed the business models of leading energy companies and prepared an industry development forecast. Between September and October 2018, we received responses from 118 power and utility executives from over 100 companies and 56 different countries in Europe, the Americas, the Asia-Pacific region, the Middle East and Africa. From our survey, we identified five issues that are the key building blocks for power and utility companies.

A strong future business direction

Even the most established incumbents need an identity based on a clear view of their role in the new world of energy. Companies that articulate an identity and direction will be able to invite participants, gain additional momentum and act as a reliable partner. Employees, suppliers and outside partners will be more willing to collaborate and help design aspects of transformation programmes. If you know where you are going, it will be much easier to convince others to join you.

Customer trust

Trust is becoming ever more important in the new, increasingly digitised environment. Customer relations are changing and companies are moving from being commodity suppliers to partners in creating energy solutions. Utilities have long focused on building reliability into their operations and reputations. Their focus has now changed to developing trust. You need to put psychology first: design every move so that it resonates with customers, employees, investors, regulators and other stakeholders; and make your company the kind of enterprise with which people want to be associated.

A firm innovation footing

Utility companies face the challenge of how to innovate in organisations that are well established in their own culture and existing operational imperatives. Typically, you develop and test each new approach on an experimental basis before syndicating those that work and implementing them at full scale. As you raise the bar more and more, organisations transition more easily and more effectively than they would if you had set up a dramatic plan that demanded behavioural change across an entire enterprise.

Utilising assets

The legacy for many energy companies is centralised fossil fuel assets, and the future will be increasingly decarbonised and decentralised. However, the attention you pay to managing your legacy can affect your company’s entire transformation. You need a clear and effective plan for keeping the best of your past while simultaneously resolving or divesting anything that will distract you from your future focus.

Market challenges

Even in markets that are not openly competitive, advanced technology will demand that utilities become more outward facing and adept at integrating their offerings into wider ecosystems. As well as effective collaboration, this places a premium on capabilities such as customer insights, customer management, market assessment, product innovation and management.

The transformation of global energy is gathering pace, driven by the twin forces of changing customer expectations and rapid technological evolution. Traditional utility companies are aware that there is a narrow window of opportunity – about five years – to build and acquire the strategies and capabilities needed to stay ahead.

We have canvassed industry executives for their views on how these forces will affect energy markets and highlighted the results across four focus areas, which are:

1. Keeping pace with change
2. Business model transformation
3. Customer experience
4. Collaboration and innovation.

Keeping pace with change

The convergent effects of technological advances, policy measures, the growth of distributed generation, new forms of competition and changes in customer behaviour are transforming power markets around the world. While the pace of these changes varies from market to market, it is clearly accelerating at a speed beyond what leaders thought possible just a few years ago. An industry accustomed to long-term and large-scale asset investment timescales now has to adjust to much shorter technology and project cycles.
No component of the value chain–from upstream generation through grid and network operations, and up to beyond the meter–will be unaffected.

Business model transformation

As the pace of technological evolution quickens, incumbent utilities need to transform their business models. In recent years, they have moved into a world in which the adoption of technology is much more rapid and disruptive, a world in which business models have to change quickly to reflect the new dynamics of the energy market. In some contexts, completely new models will be the order of the day. In others, the traditional regulated and integrated business model will need to change but not disappear.

Evolved models will coexist with traditional archetypes. The success of changing a business model will depend on whether utility companies get the focus right. Farsighted companies have the opportunity to transform how countries, economies, producers and consumers think about energy, its use and its value. New hardware, software and system tools are emerging that will fundamentally transform the role of utilities, the leveraging of technology, the management of assets and devices of networks and premises, and customer participation.

Strongest future competitive threat

Customer experience

New developments, such as smart grids, microgrids, local generation and local storage, all create further opportunities to engage with customers. Advanced technology is enabling the development of new energy platforms in areas such as the integration of distributed energy resources (DER), electric mobility, the Internet of Things (IoT) and energy transactions. New technology players, from the worlds of data and software development, are taking up key positions and, in some cases, disintermediating existing customer relationships.
Customers who embrace distributed generation and other technologies want to take more control of how their energy is produced and supplied.


Collaboration and innovation

In this era of rapid technological change and energy market transformation, power utility companies cannot ignore the imperative to innovate. Many observers expect more innovation to occur in the utilities sector within the next 20 years than has occurred since the time of Thomas Edison. Consequently, companies need to think very differently about how to leverage innovation as a market enabler and as a key part of their wider enterprise strategy.

However, the innovation mind-set is shifting, and many companies are looking to find ways to embed a culture of innovation into their core thinking. Ultimately, innovation will become a fundamental ingredient of a company’s go-to-market strategy. It will be a means through which they defend their positions, take market shares from other competitors and increase opportunities for the commercialisation of technologies and market solutions.


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Tatiana Sirotinskaya

Partner, Power&Utilities Leader, PwC Russia

Tel: +7 (495) 967 6318

Yury Pukha

Partner, Telecom, Utilities, Communication & Entertainment (TUCE) Leader, PwC Russia

Tel: +7 (495) 967 6499

Dmitry Stapran

Director, Strategy & Operations, Power&Utilities sector, PwC Russia

Tel: +7 (495) 223 5044

Grigory Sidorov

Director, Consulting Services, PwC Russia

Tel: +7 (495) 223 5085

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